Savings plan  for a comfortable retirement

If you find yourself wondering about a comfortable life after retirement, then you’re not alone. Let’s face it, our working lives have shaped our daily lives for many years, and now suddenly, you could be thinking, “What's next”?

But think about it, a comfortable retirement means time to re-discover old hobbies, go for sun-soaked holidays, or play a leisurely round of golf. So, do not fear the next chapter of your life, as this one can be the most exciting.

However, leading a relaxing and exciting retirement requires a significant amount of savings and smart investment management. But achieving financial freedom isn't the only obligation to retire happy. You need to use your money to create an enjoyable lifestyle that will last for decades.

  • How Much Income Do You Need in Retirement?

    The whole point of saving for a secure retirement is to continue enjoying a good lifestyle even after you are no longer receiving your monthly paycheck. Moreover, leading a comfortable retirement means having enough savings to preserve your pre-retirement standard of living. Because, even after you retire, you would probably want to shop for clothes in similar stores, buy the same food, and enjoy the same hobbies. You might have lower transportation expenses or even downsize to a less expensive home, but other expenses, such as travel, and medical bills could go up.

    Therefore, the common target should be to have at least 70 to 80 percent of your pre-retirement income once you stop working. For example, if you are earning an average of Rs. 10 lakhs before retirement, you might need a minimum of Rs. 7 lakhs to enjoy a similar lifestyle later. Remember, the lower your income, the more difficult it would become to live on less in your golden days.

    So, set a goal to have no less than 90 percent of your income, and ideally 100 percent in retirement. And if you have big goals for your post-retirement life, such as traveling extensively or owning a second home, there is nothing wrong with planning for more than 100 percent of your pre-retirement income. Also, take into account your future debt, such as student loans for your child’s college or mortgage for your dream home.

    Now let’s take a look at some steps to ensure that you don’t run out of money in your retirement. Rather, these steps will help you lead a life that you have pictured for yourself and your loved ones.

  • Save A High Proportion of Your Monthly Income

    The key to retiring comfortably is to start saving early and to save a high proportion of your income. Meaning, if you start saving 20 percent of your income from age 25 onwards, retirement by 50 years of age could be on the horizon. On the other hand, if you start later, the amount that you need to save would increase.

    Therefore, once you know how much you need for your retirement life, work backwards and determine how much you should be saving each month. For instance, if you start by saving Rs. 5000 per month at age 25, by the time you retire, your savings will have grown to approx. Rs. 71.5 lakhs, assuming 6 percent rate of return compounded annually to age 60.

  • Avoid Debt If You Can

    If you really want to accumulate significant savings by the age of 60, then you must become debt free at your earliest. Carrying debt of any kind, be it a personal loan, credit card bills, student loan, or anything else, will never allow you to save.

    This is because the EMI payments of these loans eat up a considerable chunk from your take-home salary. Therefore, try to have a pre-payment of loans, so that you can be debt free at the earliest and can save for your retirement.

  • Stick to a Good Investment Plan

    To lead the retirement life that you have always dreamt of, it’s vital to plan, divide your income needs into different categories and invest accordingly.

    Let’s understand the three categories of your ‘retirement income needs’ and how to invest towards them.

    • Minimum Guaranteed Retirement Income

      This category should include the income you need to maintain your life at the bare minimum. For that purpose, you must invest in products that can guarantee this income for as long as you live. For this category, pension plans or retirement plans are common guaranteed income sources. The best pension plan ensures that you have enough income to cover your expenses. A Pension calculator can help you figure out how much income you need.

    • Flexible Income

      This would typically include the income you need to live your desired lifestyle. Conservatively invested assets could be the source of income for this category.

    • Nice to Haves

      Income for this category can come from investments that offer higher returns. You can take some risks with your investments to achieve this goal.

  • Buy Health Insurance

    Most individuals, especially the younger lot, ignore health insurance and procrastinate buying the same. However, purchasing a health plan needs a very nominal amount as monthly premium, and it effectively covers for your medical expenses which are unimaginably high these days. Moreover, health insurance will cover you from unexpected medical costs, which are likely to increase as you grow older.

  • Save Windfalls

    If you are lucky enough to get a raise at work or a bonus, consider saving that immediately. Doing so will make it easier for you to increase your savings rate without feeling any strain.

  • Don’t Stop Budgeting

    If you have saved well, you will want to be sure that your retirement fund lasts as long as you need it to. And if your income is less-than-stellar, it’s even more imperative to budget. Readiness to be flexible with spending is “absolutely key” both before and after retirement. Budgeting before retirement is crucial because the less you spend, the more you can save and cutting spending after retirement makes your money last longer.


These steps for planning a comfortable retirement do require time and thought. However, there are many options and investments to consider for the same. Working with the right investment plan, which can help you navigate any uncertainty, may be the most important step you will take.